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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



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FORM 10-Q



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QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



|                                |  |                              
|------------------------------- |  | -----------------------------
|For Quarter Ended June 30, 2004 |  | Commission File Number 1-4456



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TEXAS EASTERN TRANSMISSION, LP

(Exact Name of Registrant as Specified in its Charter)



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|                                               |  |                                  
|---------------------------------------------- |  | ---------------------------------
|Delaware                                       |  | 72-0378240                       
|(State or Other Jurisdiction of Incorporation) |  | (IRS Employer Identification No.)



5400 Westheimer
Court

P.O. Box 1642

Houston, TX 77251-1642

(Address of Principal Executive Offices)

(Zip code)



713-627-5400

(Registrants telephone number, including area code)



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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈



The registrant meets the conditions set forth in General Instructions (H)(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format. Part I, Item 2 has been reduced and Part I, Item 3 and Part II,
Items 2, 3, and 4 have been omitted in accordance with such Instruction H.



All
of the registrants limited partnership interests and all of the limited liability company interests of its general partner are indirectly owned by Duke Energy Corporation (File No. 1-4928), which files reports and proxy materials pursuant to
the Securities Exchange Act of 1934.



Indicate by check mark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes ̈No  x



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TEXAS EASTERN TRANSMISSION, LP

FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 2004

INDEX



|     |  |                                                                                                           |  |     
|---- |  | --------------------------------------------------------------------------------------------------------- |  | ----
|Item |  |                                                                                                           |  | Page
|     |  | PART I. FINANCIAL INFORMATION                                                                             |  |     
|     |  |                                                                                                          
|1.   |  | Financial Statements                                                                                      |  | 1   
|     |  |                                                                                                          
|     |  | Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2004 and 2003           |  | 1   
|     |  |                                                                                                          
|     |  | Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003                                     |  | 2   
|     |  |                                                                                                          
|     |  | Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2004 and 2003           |  | 4   
|     |  |                                                                                                          
|     |  | Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2004 and 2003 |  | 5   
|     |  |                                                                                                          
|     |  | Notes to Consolidated Financial Statements                                                                |  | 6   
|     |  |                                                                                                          
|2.   |  | Managements Discussion and Analysis of Results of Operations and Financial Condition                     |  | 8   
|     |  |                                                                                                          
|4.   |  | Controls and Procedures                                                                                   |  | 10  
|     |  | PART II. OTHER INFORMATION                                                                                |  |     
|     |  |                                                                                                          
|1.   |  | Legal Proceedings                                                                                         |  | 11  
|     |  |                                                                                                          
|6.   |  | Exhibits and Reports on Form 8-K                                                                          |  | 11  
|     |  |                                                                                                          
|     |  | Signature                                                                                                 |  | 12  



SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995



Texas Eastern
Transmission, LPs (together with its subsidiaries, the Companys) reports, filings and other public announcements may contain or incorporate by reference statements that do not directly or exclusively relate to historical
facts. Such statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You can typically identify forward-looking statements by the use of forward-looking words, such as
may, will, could, project, believe, anticipate, expect, estimate, continue, potential, plan, forecast and
other similar words. Those statements represent the Companys intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside the
Companys control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Those factors include:



| |  | State and federal legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures, and affect the speed at and degree to which
competition enters the natural gas industry
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The outcomes of litigation and regulatory investigations, proceedings or inquiries
| | - | ----------------------------------------------------------------------------------



| |  | Industrial, commercial and residential growth in the Companys service territories
| | - | ----------------------------------------------------------------------------------



| |  | The weather and other natural phenomena
| | - | ---------------------------------------



| |  | The timing and extent of changes in commodity prices and interest rates
| | - | -----------------------------------------------------------------------



| |  | General economic conditions, including any potential effects arising from terrorist attacks and any consequential hostilities or other hostilities
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Changes in environmental and other laws and regulations to which the Company and its subsidiaries are subject or other external factors over which the Company has no control
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  | The results of financing efforts, including the Companys ability to obtain financing on favorable terms, which can be affected by various factors, including the Companys
credit ratings, the credit ratings of its parents, and general economic conditions
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The level of creditworthiness of counterparties to the Companys transactions
| | - | -----------------------------------------------------------------------------



| |  | Growth in opportunities, including the timing and success of efforts to develop pipeline infrastructure projects
| | - | ----------------------------------------------------------------------------------------------------------------



| |  | The performance of pipeline, gas processing, and storage facilities
| | - | -------------------------------------------------------------------



| |  | The extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas markets
| | - | ----------------------------------------------------------------------------------------------------------------------------------------



| |  | The effect of accounting pronouncements issued periodically by accounting standard-setting bodies and
| | - | -----------------------------------------------------------------------------------------------------



| |  | Conditions of the capital markets during the periods covered by the forward-looking statements
| | - | ----------------------------------------------------------------------------------------------



In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might
occur to a different extent or at a different time than the Company has described. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.



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PART I. FINANCIAL INFORMATION



Item 1.Financial Statements.



TEXAS EASTERN TRANSMISSION, LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions)



|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    
|----------------------------------------- |  | -------------------------- | --- | ------------------------ | - | ---- |  | ---- | --- |  | - | ---
|                                          |  | Three Months EndedJune 30, |     | Six Months EndedJune 30,
|                                          |  | 2004                       |     | 2003                     |   | 2004 |  | 2003
|Operating Revenues                        |  |                            |     |                          |   |      |  |      |     |  |   |    
|Transportation of natural gas             |  | $                          | 157 |                          | $ | 154  |  | $    | 329 |  | $ | 324
|Storage of natural gas and other services |  |                            | 42  |                          |   | 52   |  |      | 93  |  |   | 101
|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    
|Total operating revenues                  |  |                            | 199 |                          |   | 206  |  |      | 422 |  |   | 425
|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    
|Operating Expenses                        |  |                            |     |                          |   |      |  |      |     |  |   |    
|Operation and maintenance                 |  |                            | 62  |                          |   | 62   |  |      | 127 |  |   | 119
|Depreciation and amortization             |  |                            | 21  |                          |   | 21   |  |      | 43  |  |   | 43 
|Property and other taxes                  |  |                            | 5   |                          |   | 11   |  |      | 16  |  |   | 23 
|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    
|Total operating expenses                  |  |                            | 88  |                          |   | 94   |  |      | 186 |  |   | 185
|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    
|Operating Income                          |  |                            | 111 |                          |   | 112  |  |      | 236 |  |   | 240
|                                          |  |                            |     |                         
|Other Income and Expenses                 |  |                            | 1   |                          |   | 1    |  |      | 1   |  |   | 2  
|                                          |  |                            |     |                         
|Interest Expense                          |  |                            | 21  |                          |   | 21   |  |      | 42  |  |   | 42 
|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    
|Earnings Before Income Taxes              |  |                            | 91  |                          |   | 92   |  |      | 195 |  |   | 200
|                                          |  |                            |     |                         
|Income Taxes                              |  |                            | 34  |                          |   | 36   |  |      | 74  |  |   | 75 
|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    
|Net Income                                |  | $                          | 57  |                          | $ | 56   |  | $    | 121 |  | $ | 125
|                                          |  |                            |     |                          |   |      |  |      |     |  |   |    



See Notes to
Consolidated Financial Statements.



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TEXAS EASTERN TRANSMISSION, LP

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)



|                                                            |  |              |       |                  |   |      
|----------------------------------------------------------- |  | ------------ | ----- | ---------------- | - | -----
|                                                            |  | June 30,2004 |       | December 31,2003
|ASSETS                                                      |  |              |       |                  |   |      
|                                                            |  |             
|Current Assets                                              |  |              |       |                  |   |      
|Accounts receivable, net of allowance for doubtful accounts |  | $            | 184   |                  | $ | 151  
|Inventory                                                   |  |              | 25    |                  |   | 25   
|Other                                                       |  |              | 25    |                  |   | 35   
|                                                            |  |              |       |                  |   |      
|Total current assets                                        |  |              | 234   |                  |   | 211  
|                                                            |  |              |       |                  |   |      
|Investments and Other Assets                                |  |              |       |                  |   |      
|Advances receivable - affiliates                            |  |              | 1,585 |                  |   | 1,554
|Goodwill, net of accumulated amortization                   |  |              | 136   |                  |   | 136  
|                                                            |  |              |       |                  |   |      
|Total investments and other assets                          |  |              | 1,721 |                  |   | 1,690
|                                                            |  |              |       |                  |   |      
|Property, Plant and Equipment                               |  |              |       |                  |   |      
|Cost                                                        |  |              | 4,065 |                  |   | 4,022
|Less accumulated depreciation and amortization              |  |              | 1,300 |                  |   | 1,270
|                                                            |  |              |       |                  |   |      
|Net property, plant and equipment                           |  |              | 2,765 |                  |   | 2,752
|                                                            |  |              |       |                  |   |      
|Regulatory Assets and Deferred Debits                       |  |              | 109   |                  |   | 111  
|                                                            |  |              |       |                  |   |      
|Total Assets                                                |  | $            | 4,829 |                  | $ | 4,764
|                                                            |  |              |       |                  |   |      



See Notes to
Consolidated Financial Statements.



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TEXAS EASTERN TRANSMISSION, LP

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)



|                                             |  |              |       |   |                  |   |       |  
|-------------------------------------------- |  | ------------ | ----- | - | ---------------- | - | ----- | -
|                                             |  | June 30,2004 |       |   | December 31,2003 |  
|LIABILITIES AND PARTNERS CAPITAL            |  |              |       |   |                  |   |       |  
|                                             |  |             
|Current Liabilities                          |  |              |       |   |                  |   |       |  
|Accounts payable                             |  | $            | 14    |   |                  | $ | 14    |  
|Taxes accrued                                |  |              | 105   |   |                  |   | 150   |  
|Current maturities of long-term debt         |  |              | 115   |   |                  |   | 115   |  
|Interest accrued                             |  |              | 26    |   |                  |   | 26    |  
|Other                                        |  |              | 187   |   |                  |   | 151   |  
|                                             |  |              |       |   |                  |   |       |  
|Total current liabilities                    |  |              | 447   |   |                  |   | 456   |  
|                                             |  |              |       |   |                  |   |       |  
|Long-term Debt                               |  |              | 1,070 |   |                  |   | 1,070 |  
|                                             |  |              |       |   |                  |   |       |  
|Deferred Credits and Other Liabilities       |  |              |       |   |                  |   |       |  
|Deferred income taxes                        |  |              | 806   |   |                  |   | 803   |  
|Other                                        |  |              | 134   |   |                  |   | 132   |  
|                                             |  |              |       |   |                  |   |       |  
|Total deferred credits and other liabilities |  |              | 940   |   |                  |   | 935   |  
|                                             |  |              |       |   |                  |   |       |  
|Partners Capital                            |  |              |       |   |                  |   |       |  
|Partners capital                            |  |              | 2,385 |   |                  |   | 2,314 |  
|Accumulated other comprehensive loss         |  |              | (13   | ) |                  |   | (11   | )
|                                             |  |              |       |   |                  |   |       |  
|Total partners capital                      |  |              | 2,372 |   |                  |   | 2,303 |  
|                                             |  |              |       |   |                  |   |       |  
|Total Liabilities and Partners Capital      |  | $            | 4,829 |   |                  | $ | 4,764 |  
|                                             |  |              |       |   |                  |   |       |  



See Notes to
Consolidated Financial Statements.



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TEXAS EASTERN TRANSMISSION, LP

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)



|                                                 |  |                          |     |   |      |   |      |  
|------------------------------------------------ |  | ------------------------ | --- | - | ---- | - | ---- | -
|                                                 |  | Six Months EndedJune 30, |    
|                                                 |  | 2004                     |     |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES             |  | $                        | 137 |   |      | $ | 199  |  
|                                                 |  |                          |     |   |      |   |      |  
|CASH FLOWS FROM INVESTING ACTIVITIES             |  |                          |     |   |      |   |      |  
|Capital expenditures                             |  |                          | (57 | ) |      |   | (39  | )
|Net increase in advances receivable - affiliates |  |                          | (31 | ) |      |   | (136 | )
|Other                                            |  |                          | 1   |   |      |   | 1    |  
|                                                 |  |                          |     |   |      |   |      |  
|Net cash used in investing activities            |  |                          | (87 | ) |      |   | (174 | )
|                                                 |  |                          |     |   |      |   |      |  
|CASH FLOWS FROM FINANCING ACTIVITIES             |  |                          |     |   |      |   |      |  
|Distributions to partners                        |  |                          | (50 | ) |      |   | (25  | )
|                                                 |  |                          |     |   |      |   |      |  
|Net cash used in financing activities            |  |                          | (50 | ) |      |   | (25  | )
|                                                 |  |                          |     |   |      |   |      |  
|Net change in cash and cash equivalents          |  |                          |    |   |      |   |     |  
|                                                 |  |                         
|Cash and cash equivalents at beginning of period |  |                          |    |   |      |   |     |  
|                                                 |  |                          |     |   |      |   |      |  
|Cash and cash equivalents at end of period       |  | $                        |    |   |      | $ |     |  
|                                                 |  |                          |     |   |      |   |      |  



See Notes to
Consolidated Financial Statements.



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TEXAS EASTERN TRANSMISSION, LP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(In millions)



|                                                                |  |                            |     |   |                          |   |    |      |  |   |      |   |  |   |     |  
|--------------------------------------------------------------- |  | -------------------------- | --- | - | ------------------------ | - | -- | ---- |  | - | ---- | - |  | - | --- | -
|                                                                |  | Three Months EndedJune 30, |     |   | Six Months EndedJune 30, |  
|                                                                |  | 2004                       |     |   | 2003                     |   |    | 2004 |  |   | 2003 |  
|Net Income                                                      |  | $                          | 57  |   |                          | $ | 56 |      |  | $ | 121  |   |  | $ | 125 |  
|                                                                |  |                            |     |  
|Other comprehensive loss                                        |  |                            |     |   |                          |   |    |      |  |   |      |   |  |   |     |  
|Net unrealized losses on cash flow hedges                       |  |                            | (10 | ) |                          |   | (5 | )    |  |   | (18  | ) |  |   | (14 | )
|Reclassification adjustment into earnings                       |  |                            | 7   |   |                          |   | 5  |      |  |   | 15   |   |  |   | 12  |  
|                                                                |  |                            |     |   |                          |   |    |      |  |   |      |   |  |   |     |  
|Other comprehensive loss, before income taxes                   |  |                            | (3  | ) |                          |   |   |      |  |   | (3   | ) |  |   | (2  | )
|Income tax benefit related to items of other comprehensive loss |  |                            | 1   |   |                          |   |   |      |  |   | 1    |   |  |   |    |  
|                                                                |  |                            |     |   |                          |   |    |      |  |   |      |   |  |   |     |  
|Total other comprehensive loss                                  |  |                            | (2  | ) |                          |   |   |      |  |   | (2   | ) |  |   | (2  | )
|                                                                |  |                            |     |   |                          |   |    |      |  |   |      |   |  |   |     |  
|Total Comprehensive Income                                      |  | $                          | 55  |   |                          | $ | 56 |      |  | $ | 119  |   |  | $ | 123 |  
|                                                                |  |                            |     |   |                          |   |    |      |  |   |      |   |  |   |     |  



See Notes to
Consolidated Financial Statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



1. Nature of Operations



Texas Eastern Transmission, LP (together with its subsidiaries, the Company) is an indirect, wholly-owned subsidiary of Duke
Energy Corporation (Duke Energy). The Company is primarily engaged in the interstate transportation and storage of natural gas. The Companys interstate natural gas transmission and storage operations are subject to the rules and regulations of
the Federal Energy Regulatory Commission (FERC).



2. Summary of Significant
Accounting Policies



The Consolidated Financial Statements include the
accounts of the Company and all wholly-owned subsidiaries, after eliminating intercompany transactions and balances. These Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management,
necessary to present fairly the financial position and results of operations for the respective periods. Amounts reported in the interim Consolidated Statements of Operations are not necessarily indicative of amounts expected for the respective
annual periods due to the effects of seasonal temperature variations on energy consumption.



Conformity with generally accepted accounting principles (GAAP) in the U.S. requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes. Although these
estimates are based on managements best available knowledge of current and expected future events, actual results could be different from those estimates.



3. Regulatory Matters



FERC Orders No. 2004, 2004-A and 2004-B (Standards of Conduct). In November 2003, the FERC issued Order 2004, which harmonizes the standards of conduct
applicable to natural gas pipelines and electric transmitting public utilities (Transmission Providers) previously subject to differing standards. In December 2003, Duke Energy filed a request for clarification and rehearing with the
FERC regarding: (1) restrictions on how companies and their affiliates interact and share information, including corporate governance information, and (2) expansion of coverage to affiliated gatherers, processors and intrastate and Hinshaw
pipelines. (A Hinshaw pipeline is a regulated pipeline company engaged in the transportation of natural gas or the sale of interstate natural gas for resale. A Hinshaw pipeline company receives natural gas from another person within or at the
boundary of a state, and then consumes that natural gas within that state.) On April 16, 2004, the FERC issued Order 2004-A, revising the standards of conduct governing information flow between Transmission Providers and their energy
affiliates. Order 2004-A accommodates unique corporate governance issues raised by Duke Energys corporate structure and clarifies provisions governing information flows for governance purposes. The FERC also clarified the rules
expanded coverage to gatherers, processors and intrastate and Hinshaw pipelines. On August 2, 2004, the FERC issued Order 2004-B, reaffirming the previous two orders and providing clarification on a number of issues. The Company has implemented
compliance programs to meet the requirements of the order related to information flow and governance processes. The Company expects to be in full compliance with the orders, including significant training and information posting requirements, by the
September 2004 deadline, and expects the orders to have no material adverse effect on its consolidated results of operations, cash flows or financial position.



Fuel Tracker.At June 30, 2004 and December 31, 2003, Other Current Assets on the Consolidated Balance Sheets included $25 million and $30 million,
respectively, for costs related to fuel and balancing activity of the pipeline system that are recovered annually in transportation rates in accordance with the Companys FERC gas tariff.



4. Gas Imbalances



The Consolidated Balance Sheets include in-kind balances as a result of differences in gas volumes received and delivered for customers. As
the settlement of imbalances are in-kind, changes in the balances do not have an impact on the Companys Consolidated Statements of Cash Flows. Accounts Receivable and Other Current Liabilities each include $122 million as of June 30, 2004 and
$80 million as of December 31, 2003, related to gas imbalances. Natural gas volumes owed to (by) the Company are valued at natural gas market prices as of the balance sheet dates.



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5. Commitments and Contingencies



Environmental.The Company is subject to federal, state and local regulations regarding air and water quality, hazardous and solid
waste disposal and other environmental matters.



Remediation activities.
The Company is responsible for environmental remediation at various impacted properties or contaminated sites. These include some sites that are part of ongoing Company operations or are owned by the Company as well as sites owned by third parties.
These matters typically involve management of contaminated soils and may involve ground water remediation. They are managed in conjunction with the relevant federal, state, and local agencies. These sites or matters vary, for example, with respect
to site conditions and location, remedial requirements, sharing of responsibility by other entities, and complexity. Certain matters can involve statutory joint and several liability provisions, strict liability, or cost recovery or contribution
actions, whereby the Company could potentially be held responsible for contamination caused by other parties. In some instances, the Company may share any liability associated with contamination with other potentially responsible parties, and the
Company may benefit from insurance policies or contractual indemnities that cover some cleanup costs. All of these sites generally are managed in the normal course of business. At June 30, 2004, the Company has recorded reserves for remediation
activities on an undiscounted basis for approximately $25 million. Management believes that completion or resolution of these matters will have no material adverse effect on consolidated results of operations, cash flows, or financial position.



Litigation.The Company is involved in legal, tax and regulatory
proceedings before various courts, regulatory commissions and governmental agencies regarding performance, contracts and other matters arising in the ordinary course of business, some of which involve substantial amounts. Management believes that
the final disposition of these proceedings will have no material adverse effect on consolidated results of operations, cash flows or financial position.



Purchase Commitments. In the first six months of 2004, the Company entered into new capital expenditure purchase commitments of $36 million for payments due in
2004 and none thereafter.



6. Credit Risk



The Companys principal customers for natural gas transportation and storage services
are local distribution companies, industrial end-users, and natural gas marketers located throughout the Mid-Atlantic and northeastern states. The Company has concentrations of receivables from these industries throughout these regions. These
concentrations of customers may affect the Companys overall credit risk in that risk factors can negatively impact the credit quality of the entire sector. Where exposed to credit risk, the Company analyzes the counterparties financial
condition prior to entering into an agreement, establishes credit limits and monitors the appropriateness of those limits on an ongoing basis. The Company also obtains cash, letters of credit or other acceptable forms of security from customers,
where appropriate, based on a financial analysis of the customer and the regulatory or contractual terms and conditions applicable to each transaction.



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Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition.



INTRODUCTION



Texas Eastern Transmission, LP (Texas Eastern) is an indirect wholly-owned subsidiary of Duke Energy Corporation (Duke Energy). Texas Eastern and its subsidiaries (the Company) are primarily engaged in the
interstate transportation and storage of natural gas for customers primarily in the Mid-Atlantic and northeastern states. Interstate natural gas transmission and storage operations are subject to the Federal Energy Regulatory Commissions
(FERCs) rules and regulations.



Because all of the partnership interests
of the Company are owned indirectly by Duke Energy, the following discussion has been prepared in accordance with the reduced disclosure format permitted by Form 10-Q for certain issuers that are wholly-owned subsidiaries of reporting companies
under the Securities Exchange Act of 1934 set forth in General Instruction H (1)(a) and (b) for Form 10-Q.



Managements Discussion and Analysis should be read in conjunction with the Consolidated Financial Statements.



RESULTS OF OPERATIONS



Net income for the six months ended June 30, 2004 decreased $4 million compared to the same period in 2003. The decrease was mainly attributable to lower other revenues and increases in insurance and benefits
expenses.



The Companys throughput was 638 trillion British thermal units
(TBtu) for the six months ended June 30, 2004 and 672 TBtu for the same period in 2003. The decrease of approximately 5% was primarily a result of warmer weather in the first six months of 2004 in the Companys primary market areas. Revenues
are not significantly impacted by pipeline throughput fluctuations since revenues are primarily composed of demand charges.



LIQUIDITY AND CAPITAL RESOURCES



As of June 30, 2004 and December 31, 2003, the Company had no cash or cash equivalents since all cash is managed collectively at the parent-company level and is therefore
advanced to/from affiliates as cash is generated or paid by the Company. The Companys working capital was a $213 million deficit as of June 30, 2004, compared to a $245 million deficit as of December 31, 2003. The increase in working capital
was primarily attributable to the funding of tax liabilities through the net advance activity. The Company relies primarily upon cash flows from operations to fund its liquidity and capital requirements. The Companys cash flows are relatively
stable since they are supported by revenues from long-term firm contracts.



Cash flows from operating activities decreased $62 million from the same period of the prior year mostly due to the timing of tax liability settlements with Duke Energy.



Capital expenditures for the first six months of 2004 were $57 million and $39 million for the comparable 2003 period. Projected 2004
capital expenditures are expected to be lower than the $183 million disclosed in the Companys Form 10-K for December 31, 2003 due to timing of expansion projects. All projected capital expenditures are subject to periodic review and revision
and may vary significantly depending on a number of factors, including, but not limited to, industry restructuring, regulatory constraints, acquisition opportunities, market volatility and economic trends.



Increases and decreases in advances receivableaffiliates generally result from the
movement of funds to provide for operations, capital expenditures and debt payments of the Company. Advances receivable-affiliates do not bear interest. Advances are carried as unsecured, open accounts and are not segregated between current and
non-current amounts.



Cash flows from financing activities decreased $25
million from the same period of the prior year due to partnership distributions of $50 million in the first six months of 2004 as compared to partnership distributions of $25 million for the same period of 2003.



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##### Table of Contents

CURRENT ISSUES



For information on current issues related to the Company, see Note 5 to the Consolidated Financial Statements, Commitments and Contingencies.



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##### Table of Contents

Item 4.Controls and Procedures.



The Companys management, including the President and Chief Financial Officer, have evaluated the effectiveness of the Companys disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
(Disclosure Controls Evaluation) and concluded that, as of the end of the period covered by this report, the disclosure controls and procedures are effective in ensuring that all material information required to be filed in this quarterly report has
been made known to them in a timely fashion. The required information was effectively recorded, processed, summarized and reported within the time period necessary to prepare this quarterly report. The Companys disclosure controls and
procedures are effective in ensuring that information required to be disclosed in the Companys reports under the Exchange Act are accumulated and communicated to management, including the President and the Chief Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.



Management has concluded that the Disclosure Controls Evaluation identified no changes in the Companys internal control over financial reporting that occurred during the second quarter of 2004 that have materially affected, or are
reasonably likely to materially affect, the Companys internal control over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



Item 1.Legal Proceedings.



For information concerning litigation and other contingencies, see Note 5 to the Consolidated Financial Statements, Commitments and Contingencies.



Item 6.Exhibits and Reports on Form 8-K.



|(a) | Exhibits
|--- | --------



|              |  |                                                                                                                        
|------------- |  | -----------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  |                                                                                                                        
|31.1          |  | Certification of the President Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                              
|              | 
|31.2          |  | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                
|              | 
|32.1          |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|              | 
|32.2          |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



|(b) | Reports on Form 8-K
|--- | -------------------



The Company filed no reports on Form 8-K during the second quarter of 2004.



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##### Table of Contents

SIGNATURE



Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                     |  |                                                  
|-------------------- |  | -------------------------------------------------
|                     |  | TEXAS EASTERN TRANSMISSION, LP                   
|                     | 
|                     |  | By:  Duke Energy Gas Transmission Services, LLC, 
|                     |  | its General Partner                              
|                     | 
|Date: August 9, 2004 |  | /s/ Alan N. Harris                               
|                     |  | Alan N. Harris                                   
|                     |  | Group Vice President and Chief Financial Officer 
|                     |  | Duke Energy Gas Transmission Services, LLC       
|                     |  | General Partner of Texas Eastern Transmission, LP



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